Fannie Mae’s economists have revised a lot of their forecast
from last month as new data has come in. The outlook for the 2021 GDP has been
revised modestly to 7.1 percent from 7.0 percent on a Q4-over-Q4 basis. The
revision was due to data indicating stronger second quarter growth in personal consumption
which they expect was driven heavily by inventory restocking and will
decelerate significantly in the second half of the year. They also moved the 2022 growth forecast
down one-tenth to 2.7 percent and revised upward their inflation forecast.
As did the
Federal Reserve on Wednesday, Fannie Mae says much of the recent uptick in
inflation was transitory, but price pressures are likely to last into 2022.
Lagging effects stemming from recent rapid house price growth will generate
upwrd pressure. They forecast the Consumer Price Index (CPI) will remain
elevated at around 5 percent annually through the end of 2021 before decelerating
next year, and that the core Personal Consumption Expenditure Deflator (core
PCE), will end 2021 at 4.6 percent and remain elevated at 2.9 percent at the
end of 2022.